Finally A Breakout In The Gold - What's Next? - Forex News by FX Leaders

Finally A Breakout In The Gold – What’s Next?

Posted Friday, March 31, 2017 by
Arslan Butt • 1 min read

The yellow metal Gold finally decided to break out of its well-maintained trading range of $1248 – $1260. This is what we discussed in our previous update entitled Mixed Sentiments Are Taking Gold Nowhere.

Today in the early Asian session, the Gold hit a 10 days low at $1240.36 due to increased demand for the greenback. As we discussed in our 31st of March Morning Brief,  the strength of the U.S dollar index was mainly caused by a number of favorable economic events.

Specifically, the U.S gross domestic products (GDP), as well as hawkish remarks from FOMC member Kaplan, successfully extended some support to the greenback. About Kaplan's statements; a quicker movement of policy normalization will probably be required with the Fed fund rate hikes for the year 2017 in order to stabilize the overheating economy.  

Due to the negative correlation with the dollar, the Gold dipped over diminishing demand for haven assets.

Gold 4 - Hours ChartGold 4 – Hours Chart

 

Technical Outlook

Besides for the breakout of its trading range, the Gold slipped below a strong trendline support of $1250. In the 4- hour chart, we can see bearish crossover not only in the RSI but also in the 50 periods EMA.

At this moment, the Gold prices are holding below a strong resistance level of $1246. On the other hand, sellers are going to find a support at $1238 and $1234.

Trading Signal: Fellows, we unfortunately missed a trading opportunity overnight. However, I'm looking to enter a sell position on an upside pullback below $1246 with a stop loss of $1249 and a take profit of $1238.

We need to keep an eye on U.S economic events, as the negative figures may extend a support to the weaker Gold prices.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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